Monday, March 30, 2009
Anti-muni broadband bill is back
The “Anti-Competition Act” is back.
Two years ago, state legislators rejected a bill that would have effectively made it impossible for cities, towns and counties to build their own high-speed Internet, cable TV or phone services. Now a new version of the bill has emerged.
Last week, N.C. Sen. David Hoyle (D-Gaston) introduced SB1004 to “level the playing field” of telecommunications by saddling local governments with extra costs and strict financial requirements if they seek to compete with private companies.
Industry advocates say it’s unfair that governments can borrow money more cheaply, through bonds, than private companies can. So the bill would require local governments to tack on to the fees they charge consumers the difference in the amount it would cost a private company to borrow start-up funds.
Also, a city could not use government funds to “cross-subsidize” the launch or operation of a system—a practice common in private industry.
The bill appears to aim directly at the City of Salisbury, which is building its own $30-million municipally owned fiber-optic Internet, TV and phone system.
The City of Wilson launched a similar system last summer. As Salisbury’s system will do, Wilson’s Greenlight competes with the cable and DSL offerings of private companies in the area. But the city-owned, fiber-based service offers significantly higher speeds at comparable prices (see "Mighty, mighty broadband," June 18, 2008).
“This is an attempt to protect monopolies at the expense of local communities,” says Wilson spokesperson Brian Bowman. “The 2007 bill that would have crippled Wilson was a bad bill and so is this one.”
In 2007, phone and cable companies pushed hard for "The Local Government Fair Competition Act,” but an alliance of cities, public interest groups and private companies –- including Google –- successfully opposed it.
Among the opponents was Catharine Rice of Action Audits, which advises and advocates for local governments on communications issues. She says the bill is geared to prevent competition. “The industry wants to burden communities who want to build their own networks to underserved areas by loading them up with costs so that the rates are so high, nobody will buy the service.”
Stakes are higher this time around, Rice says, because the bill could prevent North Carolina communities from being eligible for broadband stimulus money.
“The [National Telecommunications and Information Administration] has set aside $4.7 billion to bring broadband to underserved and un-served communities, making states and localities directly eligible,” Rice says. But the agency has said it will only fund financially sustainable projects, and saddling governments with extra costs renders their services unsustainable, Rice says. If the state legislator passes this bill, “the rest of the country would get to apply for federal broadband grant money, but not North Carolina.”
Comments (8)
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well, for better or worse, its been the Law since Bev went along with the wisdom of the NCGA http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2009&BillID=S1004
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Then to your point, is there anything at all in the legislation which would have prevented the town of Wilson from installing their service (and please point out where in the legislation and how it would prevent it)? On a curious note, because I really do think if a city can pull it off they should, how did the city of Wilson fund the startup without taxpayers money? To another point, you quoted Catharine Rice "bill could prevent North Carolina communities from being eligible for broadband stimulus money" I have seen this same argument in other blogs citing Section 160A-329 (b)(3) in HB1252. The quotes though are taken out of context and ignore the last part of the first sentence: "(3) Shall not subsidize the cost of providing communications service with funds from any other noncommunications service, operation, or other revenue source, including any funds or revenue generated from electric, gas, water, sewer, or garbage services, but excluding funds from State or federal grants and other governmental stimulus programs." It clearly states funds from state or federal grants and stimulus programs can be used. As far as "Cross Subsidizing" is concerned, private industry does it all the time because that is what they are in business to do. Utilize all of their assets to promote growth of the company. In the case of a government run business, cross utilizing would cause resources paid for through tax dollars to be used in this endeavor. The whole thrust of this bill is to prevent tax dollars from being diverted from other areas to this. As stated above, in Section 160A-329 (b)(3), provisions are there for municipal grants to the project. If a city, county, or state government proposes and passes a bill to provide a grant to implement one of these projects, this bill does not preclude it. I fully agree the wording in the bill should be scrutinized thoroughly before enactment and no undue burdens should be placed on the municipality. BUT, if a govenment entity wants to run a profitable business, it first needs to follow the same rules private businesses of the same ilk must follow PLUS since it is a government entity, it needs the extra oversight provisions to ensure it is managed properly. One last note (for now), if anyone has true issues with any of the wording in the bill, they need to call their representatives and have a heart to heart talk with them. If that doesn't help, call the other representatives until you get someone to listen. Try to get the wording changed, or perhaps they'll explain to your satisfaction why it shouldn't be.
As a matter of clarity, I'd like to point out that the City of Wilson, which is an often cited example of municipal broadband service, has never used tax money to build or subsidize its Greenlight service. Customers in Wilson can choose between Greenlight, Time Warner Cable, Embarq DSL and other services.
Well said Marie, The bill, as I read it, only applies those same fees and regulations to the city owned service as to privately owned services. The same taxes paid by the private sector will be applicable to the city service. If you don't want to "level the playing field" by saddling the city with the extra fees, then level it by taking those fees away from the private sector services. Maybe then their rates might come down for the subscribers. There are exemptions in place to account for underserved cities. If run correctly, even with the regulations in place, a city run service could still be a "cash cow" and not soak the taxpayers by subsidizing it. If you want competition, the competition must be fair. Having the whole populuation of a city as subscribers (through taxes), and then, they must pay more to actually use the service is not fair competition. Enough rambling, READ THE BILL, you may change your mind about what it actually does.
Goodness gracious! The “poor” cities are under attack again! From the city point of view, HB1252 is “underwritten by the industry to keep consumers from receiving better options in telephone, cable, and Internet service.” Salisbury City Manager, David Treme, says “they have a team of lobbyists, and we have us”. Fact is, city officials are responding to a call from The League of Municipalities to protest this bill, and the cities are responding in their normal “knee-jerk” manner. The League is actually one of the most powerful lobbying organizations in the state; and it is subsidized by tax-payer money! So don’t believe the “poor us” story. You will find that they always lobby for anything that takes rights from the citizens and gives them to some form of government, just as in the issue of forced annexation. In this case, The League encourages the cities to have their own “cash cow” by making the citizens dependent on another government run utility [the same thing they’re accusing this bill of doing]. They always use the argument that if the government provides the service, then all the poor people that the mean old providers aren’t taking care of will have the service. They used that same argument in some cities to go into the electric business; and they are losing money and taking the city residents to the cleaners on utility charges. They simply buy the power from the private companies and add fees for themselves. The same thing will happen if they attempt to provide their own internet access. And their alternate method is to buy access to some private provider’s infrastructure. HB1252/SB1004 is a good bill and I would encourage voters to contact your legislators in support of it.
Local governments should all be able to install Broadband. Politicans should be working for the people not the monopolies.
[...] the laws are being pushed again — most recently in Pennsylvania, and now, say locals, in North Carolina by Democratic State Senator David Hoyle: Last week, N.C. Sen. David Hoyle (D-Gaston) introduced [...]
This bill is a Very Bad Idea. I was involved with the City of Asheville when cable contract renewal was on the table. Some of the advice we gave to the City was implemented, much of it was not. What we predicted for income stream in the future, i.e. convergence of digital media, to the benefit of our citizens, has come to pass, but was not included in the contract. Cable rights could have reverted to the City at that time, but they did not pursue. Hindsight shows the City and its citizens would have greatly benefited. Perhaps a community faced with economic stress could offset that with an income stream based on our diet of digital information.
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